S&P assigns B- to Voodoo

S&P said it assigned a B- issuer rating to Stan Holding SAS (Voodoo) with a negative outlook.

“Our rating on Voodoo reflects the group's operations in the very competitive and volatile mobile video games industry and the ongoing strategic shift in its business model that will likely lead to lower profitability than peers'. Voodoo generated more than 70% of its 2022 revenue from advertising, which comes mainly from its hyper-casual and hybrid-casual mobile games operations. This exposed its earnings and cash flows to the volatility and a steep decline in advertising revenue. The remaining share of revenue comes from in-app-purchases (IAP) within Voodoo's casual mobile games, which are growing and more recurring in nature,” S&P said in a press release.

The agency noted Voodoo’s leverage at above 9x where it is expected to remain for 2023 before declining to above 7x in 2024.

“The negative outlook reflects our view that, over the next 12 months, Voodoo may not achieve sustainable earnings growth as it repositions its business model such that its free operating cash flow (FOCF) will stay negative, and its leverage will remain very high at above 9x,” S&P said.

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